SB-1174 • 2026

Public contracts: Department of Transportation: bid preferences: employee stock ownership plans.

Labor Small Business

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Valladares
Last action: 2026-06-01
Official status: Referred to Coms. on TRANS. and JUD.
Effective date: Not listed

Plain English Breakdown

The official source material does not provide specific details about the exact penalties or suspension periods, leaving these aspects uncertain.

Department of Transportation Bid Preferences for ESOP Contractors

This law requires the Department of Transportation to give bid preferences to contractors that have an Employee Stock Ownership Plan (ESOP) starting January 1, 2028, and sets penalties for fraudulent behavior.

What This Bill Does

Requires the Department of Transportation to provide certain bid preferences to ESOP contractors bidding on state-funded construction contracts starting January 1, 2028.
Makes it unlawful for a person or contractor to engage in specified behaviors related to the fraudulent obtaining or retaining of an ESOP bid preference.

Who It Names or Affects

The Department of Transportation
Contractors with Employee Stock Ownership Plans (ESOPs)
People or contractors engaging in fraudulent behavior

Terms To Know

Employee Stock Ownership Plan (ESOP): A type of retirement plan where employees own shares of the company they work for.

Limits and Unknowns

The bill does not specify exact penalties or suspension periods.
It is unclear how many contractors will qualify under this new rule.

Bill History

2026-06-01 California Legislative Information
Referred to Coms. on TRANS. and JUD.
2026-05-22 California Legislative Information
In Assembly. Read first time. Held at Desk.
2026-05-22 California Legislative Information
Read third time. Passed. (Ayes 33. Noes 0.) Ordered to the Assembly.
2026-05-20 California Legislative Information
Ordered to special consent calendar.
2026-05-14 California Legislative Information
Read second time. Ordered to third reading.
2026-05-14 California Legislative Information
From committee: Do pass. (Ayes 7. Noes 0.) (May 14).
2026-05-08 California Legislative Information
Set for hearing May 14.
2026-05-04 California Legislative Information
May 4 hearing: Placed on APPR. suspense file.
2026-04-24 California Legislative Information
Set for hearing May 4.
2026-04-22 California Legislative Information
From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 13. Noes 0. Page 3978.) (April 21). Re-referred to Com. on APPR.
2026-04-09 California Legislative Information
Set for hearing April 21.
2026-04-08 California Legislative Information
From committee: Do pass and re-refer to Com. on JUD. with recommendation: To consent calendar. (Ayes 12. Noes 0. Page 3760.) (April 7). Re-referred to Com. on JUD.
2026-03-17 California Legislative Information
Set for hearing April 7.
2026-02-26 California Legislative Information
Referred to Coms. on TRANS. and JUD.
2026-02-19 California Legislative Information
From printer. May be acted upon on or after March 21.
2026-02-18 California Legislative Information
Introduced. Read first time. To Com. on RLS. for assignment. To print.

Official Summary Text

SB 1174, as introduced, Valladares.
Public contracts: Department of Transportation: bid preferences: employee stock ownership plans.
Existing law establishes the Department of Transportation and requires it to improve and maintain the state highways. Existing law authorizes the department to enter into any contracts required for the performance of its duties, as provided. Existing law establishes bid preferences in public contracting for certain types of bidders, including, but not limited to, small business and microbusiness bidders.
This bill would, on and after January 1, 2028, require the department to provide certain bid preferences to a contractor with an employee stock ownership plan (ESOP) that bids on a state-funded construction contract, as specified. The bill would make it unlawful for a person or contractor to engage in specified behaviors related to the fraudulent obtaining or retaining of an ESOP bid preference and would subject a person or contractor engaged in
those behaviors to a suspension from bidding on or participating in any contract with the department for certain periods and specified civil penalties.

Current Bill Text

Read the full stored bill text

Download Bill PDF